Investor Briefing: For personal use only - · PDF fileInvestor Briefing to be presented this...
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Australian Stock Exchange Company Announcements Platform 11 December 2013
UXC Limited
ABN 65 067 682 928
MARKET ANNOUNCEMENT
Investor Briefing:
Building the Future – Enhancing UXC’s Growth Platform UXC Limited hereby releases the attached presentation to be given by the Managing Director, Mr Cris Nicolli, and the Finance Director & Company Secretary, Mr Mark Hubbard, at an Investor Briefing to be presented this morning at UXC’s Melbourne Head Office and tomorrow morning at UXC’s main Sydney Office.
For more information please contact:
Mr Cris Nicolli Managing Director UXC Limited (613) 9224 5777
Mr Mark Hubbard Finance Director / Company Secretary UXC Limited (613) 9224 5757
Toll free shareholder information line: 1800 092 092 www.uxc.com.au
ABOUT UXC LIMITED
UXC Limited is an S&P/ASX 300 listed Australian business solutions company, and the largest Australian owned ICT consultancy firm. UXC services medium to large entities in the private and public sectors across Australia and New Zealand. UXC provides a range of unique, unmatched and formidable ICT Solutions in Consulting, Business Applications and Infrastructure that support our customers to plan & design, implement & enhance, and operate & manage their ICT requirements. UXC strives to create simplicity and meaning in a complex world through the power of people and technology, by being the leading Tier 1 Australian IT Services and Solutions Company, delivering value, innovation and responsive business outcomes with excellent people.
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Cris Nicolli Managing Director
Mark Hubbard
Finance Director Company Secretary
UXC Limited Investor Briefing Dec. 2013
BUILDING THE Enhancing UXC’s Growth Platform FUTURE:
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The Start of the Journey Vision and competitive position
What we set out to achieve The major steps and Competitive rationale Stabilising the business Growing the business The vision The Strategy to fulfil vision Execution
Operational Transactions Keystone White Labelled or other
The future
Agenda F
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WHAT Being Australasian means more than more than local ownership and contribution to the economy
MAKE US DIFFERENT It’s about building a business Sustainable and Robust Leader in the IT Industry - $1B Build and maintain unique capability Customer centric Professional and respected by clients and the market Committed to delivering great outcomes Confident and humble in our approach The place that people want to work and make a difference Provides a good return to stakeholders Nimble and able to make quick decisions – an antelope F
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Vision & competitive position
Our vision To create simplicity and meaning in a complex world through the power of people and technology, by being the leading Tier 1 Australian IT Services and Solutions Company, delivering value, innovation and responsive business outcomes with excellent people
We offer a range of unique, formidable and unmatched ICT solutions in Consulting, Applications and Infrastructure that support our customers to Plan & Design, Implement & Enhance, and Operate & Manage their ICT requirements – we offer more than point services, we also provide end to end solutions
Our focus To be recognised as the leading Australasian IT service provider and the Number One alternative to the multinationals in the sector through the depth and breadth of our services, customer centricity and market leading capabilities
Competitive position
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Step -1 Building the IT BSG Business Picking the space to invest Acquiring the key businesses Growing client base
Step 1 Developing the new strategy Selling off non core assets Forming the Pure IT business Transparency
Step 2 Simplifying the business Strengthen the Balance Sheet Step 3 Growing the Business Building the annuity revenue stream Large account and project focus Step 4 Building the $1B business Improving margins
Strategy
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Application Implementation - ERP Microsoft Oracle SAP
Infrastructure Scale & Outsourcing
Getronics
Higher value IT consulting Lucid IT
Focus on Australia/ NZ
Key account focus
Invest & grow
Core Hardware products Servers PC
Data Centres
Balance Sheet deals
Systems Integration
Large scale outsourcing
Global especially Asia
Stay away from
Step -1 Reviewed market for competition and market opportunity
Building the Business, Selecting the spaces
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Infrastructure & consulting
LanLink Alcatel Queensland Health
C4 Cisco
Getronics Outsourcing Cisco Maintenance Break fix (sold)
Lucid ITIL Training
Account Focus Key reps (QH)
Applications
Microsoft E One for Great Plains Data 3 for Navision AX investment
Oracle Red Rock BML – Peoplesoft Sequel NZ - Geographic Jigsaw – JDE MEAC and Jihra– JDE Tri Point – PeopleSoft and Annuity Prima Vera — investment
SAP Oxygen Intact SAP B1 Stream – Geographic and functional
Key Acquisition & investments Step -1
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Clear need for 2 separate business models Clear, concise accountability and close or sell non performing businesses Reduce BRANDS and streamline “go to market” and BO overlap
Aimed at driving shareholder value Swift execution
Simplify our business strategy
Increased support for Customers especially service and account management Reduction in costs and restructuring Executives accountable for outcomes
Improve profits
Delivering operational plans
Transparency with financials Shareholder discussions Investment community briefings and communication Board refresh
Amplified governance
Developing the new strategy, FY10 and FY11 Step 1
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Complex undertaking given ‘current state’ environment Execute on strategic pillars to deliver Vision Reduce costs via partial consolidation of back office
Simplify structure
Major accounts teams established Improved “go to” market & service to clients Stronger risk controls on tenders & project management New levels of reporting transparency Board changes and refresh
Professional approach
Simplifying the Business, Disciplined Execution of Strategy FY11 and FY12
Step 2
Costly; needs patience and perseverance – expensive bid costs Major investment in QH Increased need for strong structure, program and risk management Differentiates and captures clients
Invest in tier 1 deals
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Attain leadership in ERP and Managed Infrastructure Build mid enterprise market to provide balance to customer portfolio Grow UXC brand awareness Increase overall market coverage Retain existing and win more major customers Make selected investments and acquisitions Look for market consolidation opportunities
Market leadership
Operational Improvement Earning improvement Balance Sheet Management Working Capital Management
Business management
Simplifying the Business, Disciplined Execution of Strategy FY11 and FY12
Step 2
Large wins in delivery phase City West Water Fosters / TWE Hills Industries Holcim Utilities - Hydro Tasmania State Government – QH and QR
Significant costumers wins
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Building UXC to be a significantly larger Australasian IT leader and be the # 1 alternative to the multi-nationals for large complex SI and managed services contracts Drive earnings improvement in quality and value To further advance our position in the ERP application implementation and SI segment Strong focus on large client retention and new wins To continue to build UXC business in the mid enterprise market to provide balance to our client portfolio mix To retain and increase our market leading position in key technology segments by organic growth and acquisitions Promotion of UXC brand to leverage business Look for market consolidation opportunities
Step 3 Growing the business, Strategy direction, Improving the margins, FY13-14
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New and advanced relationship with Service Now – one of the fastest growing Cloud Solution providers Globally – builds off our core expertise in service management
Further cloud services and solutions opportunities especially within UXC Connect and Applications businesses working with key vendors and partners
Increased Industry alignment within Utilities, Resources and Public Sector for deeper penetration into these markets
Expansion of Dynamics AX into the North American high growth markets
E Commerce and Digital market positioning
Step 3 Growing the business, Strategy direction Improving the margins, FY13-14
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Success for us will come from achieving and exceeding in each of these five areas of our business
Defining and achieving our vision
OUR STRATEGIC PILLARS
1 2
3 4
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Step 4 Executing and Achieving our Vision
We are building our business and expanding our range and reach of ICT solutions: Organic Growth
Large Customer retention and expansion activities
Risk management on projects especially large complex ones
Key hires to drive next large opportunities
Adding new Geographic expansion – WA, QLD, ASIA
We are planning and/or currently making investments in:
Building on our Applications market leadership
By following core vendor solutions and expanding our capabilities organically and through investments. (Picking key growth areas with Core Vendors)
We will accelerate our growth in the digital, eCommerce sector aligned to ERP systems and account opportunities
Increasing the level of Applications Support
Research into new spaces and opportunities – continue the track record.
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Step 4 Defining and Achieving our Vision
Cloud Applications:
Expanded relationships with ServiceNow, a key cloud based application provider in the ERP and IT management space.
Acquired UXC Keystone
Grow our Cloud practice in support of new vendors as well with our key partnership partners Oracle, SAP, Microsoft and ServiceNow.
eCommerce
Annuity Business:
Increase the provision of managed services in infrastructure and applications;
Expand the range of maintenance and support services provided;
Continue to win new managed services contracts;
Invest in Software as a Service Now will to align with this segment of our business.
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Step 4 Defining and Achieving our Vision
North America:
Strong Canadian practice in the Microsoft Dynamics market;
Developing USA practice in the Microsoft Dynamics Market;
Will make acquisitions in this area to build $100m plus business
Growth prospects in this region exceed those available to us domestically.
Leadership Development:
Investment in tools and training for our people to achieve our objectives;
Provide UXC with key retention benefits whilst enhancing our leadership culture.
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Our Differentiators Unique breadth, depth and size
#1 Oracle in Australia and Asia Pacific Global Leader in Microsoft – AX Global Partner FY11 Top 2 in SAP Leader in ServiceNow, ITSM Leading Business Intelligence practice Strong Integration, Project and Risk Management
Leading enterprise applications capability
1550+ staff
Unified Communications Networking Infrastructure Outsourcing IP Video Surveillance Managed Services
Contact Centre Workspace Virtualisation Cloud Solutions Enterprise Mobility Entertainment & Content
Innovative ICT infrastructure offerings
660+ staff
Unified Communications Networking Infrastructure Outsourcing IP Video Surveillance Managed Services
Contact Centre Workspace Virtualisation Cloud Solutions Enterprise Mobility Entertainment & Content
Dynamic consulting & professional solutions
530+ staff For
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DELIVERING To be the industry recognised leader in IT Transformation by combining industry leading cloud solutions, advisory, organisational change, and process consultancy services
THE EXTRAORDINARY
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Enterprises all over the world are transforming IT by adopting service automation tools and processes, making teams more innovative and efficient
UXC sees this as ERP for the IT environment CIOs can shift their attention from maintenance to service, effectively transforming enterprise IT to increase value
Service automation tools and processes provide IT value by: Consolidating fragmented and redundant service systems
Standardizing operational processes
Creating a single system of record for IT
Innovation is making access to enterprise systems easy and intuitive while freeing up the IT team to focus on projects that matter most
Execution - ITSM Landscape
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Gartner Magic Quadrant
Magic Quadrant for IT service support management tools
Strengths ServiceNow has strong marketing and branding, ServiceNow has easy-to-configure workflows The vendor makes good use of the underlying platform ServiceNow’s social IT management capabilities are ahead of the competition
Cautions (UXC opportunities) ServiceNow must demonstrate scalability by expanding its partner ecosystem and infrastructure to meet global demand The vendor requires partner ecosystem to assist in balancing messaging of IT service management offerings vs platform-as-a-service capabilities
Gartner (August 2012)
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ITSM Market and
The major software authors in the ITSM market, in order of market share1, are:
BMC Software
ServiceNow
Hewlett-Packard
CA Inc
ServiceNow is growing by taking market share in a rapidly expanding market, which in turn is supported by features of the software including: A Cloud based Software-as-a-service platform, modular model Supports ITSM to Enterprise Service Management
Platform includes workflow automation, notification escalation, reporting, 3rd party integration and administration capabilities On demand and Rapid customization Breadth of application suite
Common architecture and Customer support
1 EoY 2013 prediction, ITSM University
ServiceNow was incorporated in June 2004, and currently has a market capitalization of $7.2 billion
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About
ServiceNow Wins Techworld Award for Best SaaS Product
In 2013, ServiceNow announced a number of innovations and new products, including putting application creation into the hands of non-technical citizen developers with App Creator; instant mobility for out-of-the-box ServiceNow applications and customer-created applications; automating cloud provisioning for the entire cloud management lifecycle; HR Service Automation; and data certification for IT governance F
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About
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About
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Profile of
Founded in 2007
Purpose is to provide innovative solutions to organisations seeking extraordinary outcomes in Service Management
Preferred Partner for ServiceNow since 2007
Dedicated Customer Support Centre and Accredited ServiceNow Training Provider, Largest number of Certified Implementation consultants
Over 60+ staff dedicated to selling, implementing, and supporting ServiceNow and complementary solutions
Over 120+ successful implementations (over 80% of all ServiceNow customers in Australasia are Keystone customers)
Keystone Best Practice Build of ServiceNow leveraging over 6 years of implementation experience
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Profile of
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Deal summary
$24-$28m acquisition cost Revenue $27m annualised Annuity at over 30% Range of 4.5 to 5 times PBT 60 Staff 120 clients ASX clients Market leader Management talent Front log of business Historical average growth rate 40%
Leverages UXC Balance Sheet Continues revenue growth Aligns to annuity push Accretive Increases staff capability Focused on larger clients with greater value creation Extends market leadership Leverages UXC Consulting skills Cloud based SaaS model Very strong margin business Leverages UXC back office
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Growing North America
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Strategic Rationale
Tightly aligned to UXC strategy
Opportunity to build a faster growing business and build a “global” brand and business based on MS Dynamics
Australia/New Zealand presents limited high growth opportunities in a market in which we have strong market share
US market is faster growth and UXC has experience and franchise type model to build this with lower risk
Fully backed by Microsoft
Earnings accretive
Future state options are increased
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North America – Vision Build $100m UXC Eclipse Business
FY13 – FY16
No.1 for revenue to Microsoft
FY13 – FY16 BREP Recapture above
FY13 – FY16 Retention above
Revenue Customers People
Phase
96% 85% 1.
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North America – Vision Build $100m UXC Eclipse Business
Revenue Customers People
FY16 – FY18 Growth to
FY16 – FY18 BREP Recapture above
FY16 – FY18 Retention above
97% 88% Phase
2. $100m
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Target Profile Customers/Revenue
300 286
235
48 38 29 10
0
2
4
6
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16
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20
0
50
100
150
200
250
300
350
Req Logic Dynamics GP DynamicsNAV
Dynamics AX Dynamics SL DynamicsSCRM
AES
#Customers
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Ideal Revenue Mix
Licenses Services Annuity Total
NAV 3.3 7.3 5.6 16.2
GP 0.5 1.7 5.1 7.3
AX 1.4 5.7 3.1 10.2
CRM 0.3 1.5 0.2 2.0
IP 0.7 0.3 2.1 3.1
Other Services 0.0 10.0 0.0 10.0
6.2 26.5 16.1 48.8
MIX 13% 54% 33% 100% For
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Upside Opportunities
1st Cab off the Rank for Service Agreements
Position to support Global Accounts
Potential For UXC to Hold Global Accounts
Post Acquisition Additional Synergies
Stabilise and Focus key clients in Enterprise
IP
enhancement, Update UI
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Increasing our IP
Standalone Solution, Integrates to NAV, GP, AX
Sold Through a Partner Model
Uses Microsoft .Net Language
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Deal summary
$19-$21m acquisition cost Revenue $48m annualised Annuity at over 33% Range of 4.5 to 5 times PBT 190 Staff 1200 clients Microsoft relationship Management talent Front log of business Leverages UXC Balance Sheet
UXC becomes leader in Global MS business Delivers to USA strategy Continues revenue growth Aligns to annuity push Accretive Increases staff capability Leverages UXC Eclipse franchise model High growth market Cloud based SaaS model Good margin business Leverages UXC Eclipse back office
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Geographic Locations
India
Vietnam
Australia
23 5
5
7
35
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Commerce anywhere Omni Commerce
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Hybris An SAP company
Hybris continues to experience strong growth in its e-commerce business — it grew by an estimated 90% in 2011 and continued its growth in 2012. The company acquired 66 new customers in 2011, completed its acquisition of iCongo, and has built out sales, support and service organizations in North America, Europe, Asia/Pacific and Japan. Hybris offers an e-commerce solution with functionality including merchandising, order management, product information management, support for multiple languages and currencies, multisite and microsite capabilities, analytics and reporting, native support for iOS and Android devices, and social commerce. The business administration tools are available in seven languages.
e Hybris supports B2B and B2C e-commerce models, with approximately 40% of its business coming from customers with predominantly B2B requirements. hybris offers scalable and flexible solutions that meet the needs of large and midsize enterprises, and more than 66% of hybris customers generate more than $100 million in e-commerce revenue.
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Profile
White Labelled provides consulting (time and materials, and fixed price), site / application support and periodic software license sales
White Labelled is capable of implementing, integrating and servicing all leading e-commerce platforms. Today White Labelled solutions are predominantly built in hybris (an SAP company solution), Magento and ATG
White Labelled is a well established ecommerce solutions provider, building digital commerce environments for multi-channel and pure-play retailers. White Labelled’s clients require a fully integrated online commerce solution in order to sell and fulfil customer orders F
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Service offering
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Case studies
Design and development of the Qantas epiQure eCommerce website built in Hybris
Full integration into Qantas Frequent Flyer loyalty and points system
ERP integration for PO and ordering
Site currently in production
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Case studies
Hybris development support
Business Analysis
Project Management
User Experience
User Interface Design
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Case studies
Integration into POS for fulfillment
Buy online, pickup instore
Store based inventory lookup on the web
Custom integration for:
Order Management
Freight Management
Stock on Hand For
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Clients
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Deal summary
$2m plus earn out acquisition cost
Revenue $6m annualised
Annuity 15%
4.0 times PBT
60 Staff
Key large clients
Hybris
Fast Growing market
Front log of business
UXC becomes leading player in e Commerce business
Delivers to new growth areas
Drives new value to clients
Accretive
Increases staff capability
Extends SAP relevance
Provides offshore capability
Leverages UXC Oxygen back office
Good margin business
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Growing the business
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Summary
Market is changing but this is not a time to get distracted – hold the strategy
Good track record of building growth opportunities in selected space. We expect to continue this success.
Achieved significant changes and repositioning
Stabilised and improved business to provide the capacity for next growth initiative. Building our annuity as platform for stability. F
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Summary
New opportunities are emerging - the next chapter of strategic imperative and growth are being pursued
Core business will continue to be the main game plan
Committed to Margin improvements – IP is a focus
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&
SUCCESS WHAT IT LOOKS LIKE It’s when we can say we are the Australian IT company most admired for 1. Our people keeping it real 2. Solutions technology delivered in a simple way 3. Outcomes building value for our clients 4. Building our business for our Shareholders 5. The promises we keep
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Cris Nicolli Managing Director
Mark Hubbard
Finance Director Company Secretary
UXC Limited Investor Briefing Dec. 2013
QUESTIONS?
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